District Court Judge Deals Blow to Obamacare Cost-Sharing Subsidy Program

U.S. District Court Judge Rosemary M. Collyer ruled this week the Obama Administration has been improperly funding a key subsidy program of the Affordable Care Act. While the ruling is widely considered a huge victory for the House GOP, the program will be allowed to continue pending appeal.

After the ruling, small business owners connected to the Main Street Alliance spoke out against the House Republicans’ latest assault on the ACA.

“Today’s District Court ruling marks the latest politically motivated attack on Obamacare and, if it stands, could increase costs for millions of Americans living at or near the poverty line. My customers and my community members can’t afford to have their access to affordable healthcare limited. Increasing their costs and limiting their resources won’t help my bottom line, either,” said Jim Houser, owner of Hawthorne Auto Clinic in Portland.

“Taking aim at the cost-sharing subsidies that help low-income Americans manage out-of-pocket healthcare expenses is little more than political posturing at the expense of hardworking men and women and the ruling must move swiftly to the D.C. Court of Appeals where it should ultimately be overturned,” added David Borris, owner of Hel’s Kitchen Catering in Chicago.

Houser and Borris are members of the Main Street Alliance Executive Committee.

The 2008 Affordable Care Act aimed to expand access to affordable healthcare to millions of uninsured and underinsured Americans by, among other measures, creating two subsidy programs for individuals who enroll in the health insurance marketplace.

The premium tax credit that helps subsidize the cost of insurance premiums to anyone earning between 100% and 400% of the poverty level and the cost-sharing reduction, which helps pay for deductibles, co-payments, and other out-of-pocket charges, and are only for individuals earning between 100% and 250% of the poverty level. The latter of the two, the cost-sharing reduction, was dealt a blow today when Judge Collyer ruled it was improperly funded. Unlike the premium tax credit, these subsidies are paid directly to the insurance company or medical vendor. As of mid-2015, there were 5.6 million enrollees covered by plans that included cost-sharing subsidies.

The lawsuit, filed last year by House Republicans challenged the cost-sharing subsidy and argued that the subsidies cannot be paid directly to insurers because Congress did not appropriate the money for these payments. Judge Collyer agreed and ruled that the Obama Administration had indeed been improperly funding the subsidy program. She wrote that Congress authorized the program but never provided money for it.

The case will now head to the U.S. Court of Appeals. If allowed to stand, the ruling could potentially be a setback for millions of low-income Americans and make insurance costs higher. If the cost-sharing subsidies are eliminated, insurers could increase premiums up to 20 to 30 percent to make up for the loss. This could mean higher premium tax credits and a higher cost to the federal government.